Creating a Competitive Rwanda Files/20070627_Rwanda_5d0cc… · 2007-06-27 · botswana namibia rwanda congo (brazzaville) zambia south africa senegal sao tome and principe kenya
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
This presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage of Nations (The Free Press, 1990), “Building the Microeconomic Foundations of Competitiveness,” in The Global Competitiveness Report 2006 (World Economic Forum, 2006), “Clusters and the New Competitive Agenda for Companies and Governments” in On Competition (Harvard Business School Press, 1998), and ongoing research on clusters and competitiveness. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the permission of Michael E. Porter.Further information on Professor Porter’s work and the Institute for Strategy and Competitiveness is available at www.isc.hbs.edu
Creating a Competitive Rwanda
Professor Michael E. PorterHarvard Business School
• Fewer barriers to trade and investment• Rapidly increasing stock and diffusion of knowledge• Competitiveness upgrading in many countries
• Globalization of markets• Globalization of capital investment• Globalization of value chains• Increasing knowledge and skill intensity of competition• Value migrating to the service component of the value chain
Drivers
Market reaction
• Improving competitiveness is increasingly essential to Rwanda’s prosperity
ANGOLAMOZAMBIQUETANZANIANIGERIAETHIOPIAUGANDABURKINA FASOGHANACAPE VERDEMALAWIBOTSWANANAMIBIARWANDACONGO (BRAZZAVILLE)ZAMBIASOUTH AFRICASENEGALSAO TOME AND PRINCIPEKENYABENINTHE GAMBIACAMEROONMAURITIUSGUINEABURUNDILESOTHOTOGOSWAZILANDMADAGASCARERITREAGABONCOTE D'IVOIREZIMBABWE
Source: EIU (2007)
Countries sorted by 2001- 2006 annual real GDP growth rate (CAGR)Annual growth rate
Note: Most recent Gini index data available for each country (1999 – 2003). Rwanda’s data is from 2000. Source: World Bank, World Development Indicators, 2007.
• Economic growth rates have rebounded strongly since 2003• Many areas of the Rwandan business environment have improved
(e.g., communications and IT, education) • Established clusters (coffee, tea, tourism) have performed well
However
• The global economic environment has been favorable• Rwanda’s growth rates are still moderate relative to peers• Numerous areas of the business environment need further
improvement• Strengthening the private sector and increasing public-private
collaboration is essential to achieving the next level of progress
• Rwanda must dramatically improve its competitiveness
Macroeconomic, Political, Legal, and Social ContextMacroeconomic, Political, Legal, and Social ContextMacroeconomic, Political, Legal, and Social Context
• A sound context creates the potential for competitiveness, but is not sufficient• Competitiveness ultimately depends on improving the microeconomic capability
of the economy and the sophistication of local competition
State of Cluster State of Cluster DevelopmentDevelopment
• Successful economic development is a process of successive upgrading, in which the business environment improves to enable increasingly sophisticated ways of competing
Local demand with improving sophisticationLocal customer needs that anticipate those elsewhereUnusual local demand in specialized segments that can be served nationally and globally
Presence of high quality, specialized inputs available to firms
–Human resources–Capital resources–Physical infrastructure–Administrative infrastructure–Information infrastructure–Scientific and technological
infrastructure–Natural resource availability
Access to capable, locally based suppliersand firms in related fields
A local context and rules that encourage investment and productivity
–e.g., Intellectual property protection
Meritocratic incentive systems in businesses and other institutionsOpen and vigorous local competition
Source: Prof. Michael E. Porter, International Cluster Competitiveness Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. Underlying data drawn from the UN Commodity Trade Statistics Database.
National Cluster Export Portfolio Rwanda, 1997-2003
Change in Rwanda’s world export market share, 1997 – 2003Source: Prof. Michael E. Porter, International Cluster Competitiveness Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. Underlying data drawn from the UN Commodity Trade Statistics Database and the IMF BOP statistics.
The Process of Economic Development Shifting Roles and Responsibilities
Old ModelOld Model
• Government drives economic development through policy decisions and incentives
• Government drives economic development through policy decisions and incentives
New ModelNew Model
• Economic development is a collaborative process involving government at multiple levels, the private sector, universities, research institutions, and business associations
• Economic development is a collaborative process involving government at multiple levels, the private sector, universities, research institutions, and business associations
• Competitiveness must become a bottom-up process in which many individuals, companies, clusters, and institutions take responsibility
Role of the Private Sector in Economic Development
• A company’s competitive advantage depends partly on the quality of the business environment
• A company gains advantages from being part of a cluster• Companies have a strong role to play in upgrading their business
environment
• Take an active role in upgrading the local infrastructure• Nurture local suppliers and attract foreign suppliers• Work closely with local educational and research institutions, to
upgrade their quality and address the cluster’s needs• Inform government on regulatory issues and constraints bearing on
cluster development• Focus corporate philanthropy on enhancing the local business
environment
• An important role for trade associations– Collaboration, cost sharing, and increasing influence
Company Capabilitiese.g., large number of world-class multinationals with regional headquarters and significant operations in Singapore
Geographic Levelse.g., Growth Triangle, ASEAN
Macro/political/legal/sociale.g., Expand cultural attractions
National Diamonde.g., Upgrade Singapore’s research institutions; improve the efficiency of Singaporean domestic economy
Cluster Developmente.g., Develop more Singaporean SMEs to deepen clusters; improve the number and quality of IFCs
Company Capabilitiese.g., build the capability of Singaporean companies and encourage regional strategies
Geographic Levels e.g., Create friendly relationships with ASEAN neighbors
National Economic Strategy Singapore
• What roles in regional and world economy? e.g., Business, financial, and knowledge hub of Southeast Asia
• What unique value as a business location? e.g., Highly efficient place to do business; access to skilled and hardworking staff
• For what range of clusters, activities within clusters? e.g., clusters benefiting from a business hub but not dependent on a large home market or physical proximity to markets